1th

ere

port

COUNTRYPROFILE

17.07.2019

three in five people now use mobile internet services and most of them have 3G or 4G connections. It’s great that a cultural product like music is also helping fuel demand for faster connectivity. The technology’s always improving, which is exciting as there is still a significant proportion of fans that we haven’t reached yet through mobile channels.”

Mia Nygren (pictured right), MD for Spotify Latin America, says that smartphone adoption in Mexico has “picked up pretty fast in the past year, which is a

MARKET PROFILE Mexico

Mexico has turned its world upside down in an unlikely situation where music is driving smartphone adoption rather than the other way around. And it’s all helping to send recorded music revenue to new heights

STATS

f Population 126.0md GDP (Purchasing Power Parity) $2.463 trillion GDP per capita (PPP) $19,900 GDP real growth rate 2.0%h Internet users 73.3m Percent of population 59.5% Broadband subscriptions 17.1mi Total mobile phones 114.3m Source: CIA World Factbook

MEXICO

We’ve all heard of the smartphone as a driver of digital music consumption. But how about music as

a driver of smartphone adoption? That, according to Tomás Rodriguez, MD of Warner Music Mexico, is what we are seeing in Mexico as the country continues a hot digital streak that has seen recorded music revenue rocket over the last few years.

That might seem like a slightly unlikely situation and, certainly, music is not the sole driver in smartphone use in Mexico.

Device prices started to fall after reforms in 2013 that increased competition in the Mexican market, with smartphone penetration in the country climbing to 45.6% of the country’s population in 2018, according to Newzoo’s Global Mobile Market Report, putting it behind only Argentina, percentage-wise, in Latin America.

But Rodriguez says that music has played an important role in this. “Music has proven a major driver of smartphone adoption in Mexico,” he says. “About

Music has proven a major driver of smartphone adoption in Mexico. About three in five

people now use mobile internet services and most of them have

3G or 4G connections....” – Tomás Rodriguez,

Warner Music Mexico

2th

ere

port

COUNTRYPROFILE

17.07.2019

natural development for any market”. “We see plenty of room to grow as more

people gain access to mobile networks,” Nygren adds. “In Mexico, mobile data consumption has increased sixfold in the last three years. In the first quarter of 2019, there was almost a 100% increase of mobile data usage year-on-year.”

Nygren says that Mexico’s goal to increase broadband access to 87% of Mexico’s population by 2024 opens an opportunity for the company to reach more people, with 5G also being rolled out in Latin America from next year. Even so, Spotify recently launched Spotify Lite (“a

small, fast, and simplified version of our main Spotify app”) in 36 countries around the world, including Mexico.

Speak to people in the music industry in Mexico and talk of its potential comes up again and again. True, Mexico has already become a major music market – the 16th largest in the world in 2018 according to local sources. But there is a feeling that it can go a lot further thanks to its size, the country’s love of music and the fact that its digital infrastructure still has lots of room to grow. In 2016, the country had 73.3m internet users, according to the CIA World Factbook, or just under 60% of its total

MARKET PROFILE Mexico continued...

ISSUE 358

RECORDED MUSIC SALES(Volume, million units)

DIGITAL MUSIC REVENUE BY FORMAT(In US$ millions)

0

5

10

15

20

2012 2013 2014 2015 2016 0

10

20

30

40

50

Paid subscriptions /freemium stream

Single-track downloads

Ad-supported streams

CDsFull album downloadsOther physicalMobile personalisation

population. Statista, meanwhile, claimed that Mexico had 85m internet users in 2018 and predicted this would rise to 101.6m in 2023.

Recorded music revenue in Mexico grew 14.7% in 2018, with streaming revenue up 30% year-on-year. Rodriguez says this is just the start.

“More and more music fans in Mexico have embraced streaming and an increasing number are paying to subscribe to a service,” he says. “There are more than 130m people in Mexico [the CIA World Factbook says 126m], so the market’s always had huge potential; now

it’s being properly tapped. Internet and mobile penetration is continuing to grow, so there’s scope for increased revenues in the years ahead if we keep delivering great music that attracts fans to streaming services.”

The global music industry is already turning its attention to Mexico. In November 2018, Spotify called Mexico City “the World’s Music-Streaming Mecca”, with the company’s largest listener base worldwide. Mexico City, Spotify adds, is now “a top-streaming destination for musicians like Adele, Diplo (pictured below), Metallica, Harry Styles, Radiohead, New Order, Bruno Mars, Madonna, the late Michael Jackson, and many more”.

Source: IFPI

Diplo

3th

ere

port

COUNTRYPROFILE

17.07.2019

Nygren says that Latin America represents 22% of Spotify’s monthly active users and 20% of subscribers, as of 29th April this year, with growth in the company’s emerging regions outpacing more established markets. She explains the ratio between free and paid users in Latin America “is very healthy and in line with the global average”.

“Spotify’s market penetration in Mexico is still at an early stage compared to other more mature music markets,” Nygren adds. “Therefore the expectation on growth is that it will continue to be very positive in the coming years.”

Mexico City was also cited as one of the world’s Trigger Cities – cities that latch onto new songs early and play them incessantly, thus triggering algorithms

that surface these songs to global users – by Chartmetric in a blog post that has grabbed the attention of the Western music industry.

Rodriguez says that global tastemakers are paying increased attention to Mexico. “We’re working more closely than ever before with our Warner Music colleagues from around the world,” he adds. “The smash hit ‘1,2,3’ by Sofia Reyes, featuring Jason Derulo and De La Ghetto, is an example of the cultural collaborations we’re seeing as traditional barriers fall away. We’re trying to get our global superstars and developing acts into Mexico as much as possible and we also try to expose our Mexican artists to fans worldwide.”

Rodriguez mentions local artists Jesse

MARKET PROFILE Mexico continued...

ISSUE 358

& Joy, Luis Miguel, Maná, Sofia Reyes and Zion & Lennox as “racking up huge numbers of spins on streaming platforms”.

“In an age of global charts and lower barriers to music discovery, we’re seeing them build global fanbases,” he says. “We’re extremely excited about the potential for our artists to reach even more fans worldwide in the years ahead.”

Nygren, meanwhile, says that one of Spotify Mexico’s “main bets this year” is regional Mexican music and its sub-genres: banda, corrido and ranchera. “Artists of the genre are some of the most streamed in Mexico, and in some parts of the US,” she explains. “For example, from the listeners for our flagship banda playlist La Brava, around 30% come from the US.”

For all this, the Mexican music industry is not without its worries. The country’s economy may have grown steadily over the last decade, but its reliance on the neighbouring US must be a concern in this bizarre and tempestuous age of geo-politics. Meanwhile, the country’s music industry has its own concerns over the value gap. “We’ve campaigned alongside other

rightsholders for the government to take action on the value gap,” says Rodriguez. “The European Union has clarified its rules in this area and Mexico needs to follow suit if it wants to remain an attractive place for artists and record labels to operate in.”

And yet Rodriguez remains very positive, predicting that Mexico could soon be a top 10 global market. “We were the 16th biggest market overall worldwide and, as streaming adoption becomes more widespread, I believe we’ll start to see Mexico push towards becoming a top 10 market,” he says. “In addition to our superstars, we’ve have some amazing developing artists such as Alex Hoyer, Hadrian and Pipe Cruz, so I think the future of Mexican music is very

bright.”Nygren shares this positivity.

“We started six years ago in Mexico and it was a match made in heaven,” she says.

“The engagement from the users, in terms of hours spent per

listening session, is among the highest ones in the world, as well as our brand metrics in the market. The upside of growth in the Mexican market and the momentum we have gained in the past six years gives us plenty of reasons to be optimistic.” :)

Jesse & Joy

Zion & Lennox